Analysts predict economic crisisThis might explain today's sell off:
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Analysts predict economic crisis if presidential runoff repeated in Romania
Dec 09, 2009 (BBC Monitoring via COMTEX) -- [Report by Andrei Luca Popescu: "Challenging Election Results Could Risk an 'Economic Tsunami'"]
The Social Democrats' decision to call a repeat of the presidential runoff will prolong the political uncertainty and obstruct Romania's ability to steer clear of the crisis.
The PSD's [Social Democratic Party] decision to challenge election results with the Constitutional Court will prevent Romania from steering clear of the crisis earlier. The current political uncertainty caused by the PSD's challenge and fuelled by the fear that Basescu might not be able to rapidly form a stable cabinet is making specialists anticipate an "economic tsunami." The consequences of are peat of the runoff could range from more expensive loans to covering wages and pensions, inflation, to endangering the IMF agreement.STRATFOR analysts even anticipate street protests.
Economic analyst Aurelian Dochia explains that the great disadvantage of the PSD's decision is that "the whole process of the formation of the new government will be delayed." Adrian Simionescu, director of the Vienna Investment Trust, says that Romania's immediate economic problems have nothing to do with who becomes the new president, but with the need for a stable cabinet. British analysts from the Economic Intelligence Unit argue that the first obstacle to the formation of a government is first, the PSD challenging the election and second, Basescu's limited capacity of forming an executive body.
The first indication of the economic chaos caused by the PSD's decision emerged on Monday [ 7 December] when the stock exchange fell by more than 5 per cent. Broker Cristian Sima, chairman of WBS Romania,has said that "[the cause] is the uncertainty: In Romania, we do not know who the president is, we do not have a government, and the IMF is on hold. Should Geoana [PSD chairman] show up and say 'Yes, I lost the election,' you will see that the stock exchange will go up."